Courts should rarely exercise power to thwart arbitration: HC

Delhi High Court has said that while courts have the power to issue injunction against arbitration proceedings, they should use it rarely.

A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva said courts need to remind themselves that the trend was to minimise interference with arbitration which was the “forum of choice”.

“Courts must be extremely circumspect and, indeed, reluctant to thwart arbitration proceedings. Thus, while courts in India may have the power to injunct arbitration proceedings, they must exercise that power rarely and only on principles analogous to those found in sections 8 and 45, as the case may be, of the Arbitration Act of 1996,” the court said.

Section 8 and 45 of the Act provide the circumstances under which judicial authorities can refer parties to arbitration.

“Courts need to remind themselves that the trend is to minimize interference with arbitration process as that is the forum of choice,” the bench said.

The observations came in its judgment setting aside a single judges decision restraining an Indian business man from pursuing termination of his joint venture agreement with fast food giant McDonalds in arbitration proceedings in London.